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Business groups differ on economic outlook.

The confusion over the direction of the economy in 1992 was demonstrated by the release of two recent surveys of business managers by highly respected organizations. These surveys came to very different conclusions, even though they were released within 10 days of each other.

Small business gloom deepens

A quarterly survey of 2,000 small companies conducted by the National Federation of Independent Business (NFIB) in January 1992 found the NFIB's small business optimism index fell to 98.2, the lowest level since fall 1990.

Only 10% of the small companies reported job openings, down from 14% in the previous quarter. Average employment dropped to .45 employees per company, the lowest level in 18 months.

However, hiring plans held steady. Of the small companies polled, 13% expected to add workers by midyear, while 9% anticipated layoffs. After seasonal adjustments, however, both figures are unchanged from the previous quarter.

The average interest rate paid by small companies during the period dipped 70 basis points to 9.8%, but borrowing activity rose only slightly to 35% from a record low 33% in the previous quarter.

Only 15% of the companies polled raised prices in the final 3 months of 1991, compared with 24% in the year-earlier period. The percentage of companies lowering prices was unchanged at 16%.

In releasing the results of the survey, NFIB Chief Economist William Dunkelberg said the current recession "seems to carry with it a large array of structural problems." Such problems, be said, could make the 1990s the slowest growth decade in history.

Controllers see higher sales and profits

A quarterly survey of 3,500 members of the Institute of Management Accountants' controllers council found an increasing level of confidence in sales and earnings growth for 1992.

Of the controllers polled, 48% expected sales in the first quarter of 1992 to be higher than the year-earlier period, and 47% expected a rise in profits over the same time span. Only 24% of the controllers anticipated a year-to-year drop in sales and 31% looked for a 1992 profit drop.

In the previous survey, controllers were evenly divided on the sales outlook, with 42% expecting a year-to-year sales increase for the fourth quarter of 1991 and a similar number anticipating a sales drop. However, only 40% looked for a rise in profits, while 48% anticipated a decline.
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Publication:Journal of Accountancy
Date:May 1, 1992
Previous Article:Profit outlook brightens for midsized manufacturers, but spending curbs stay.
Next Article:Oral misrepresentations suffice for securities action.

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